Mutual of Omaha reorganization

On Friday, I got the following announcement from Mutual of Omaha. My comments follow their statement.

“In mid January, approximately 1.6 million Mutual of Omaha policyholders will receive an annual meeting notice and proxy statement that includes information about our reorganization as a Mutual Holding Company. The mailing will direct policyholders to a website with additional details and our Plan of Reorganization. Mutual of Omaha is committed to remaining a mutual company, and the new structure keeps the mutual ownership principle intact. Policyholders’ membership rights transfer to the Mutual Holding Company, which becomes the ultimate parent company for Mutual of Omaha Insurance Company and its subsidiaries. This ensures the continuation of our mutuality, customer focus and culture.
Moving to a mutual holding company provides us with greater flexibility to grow, invest and respond to customer needs-while maintaining policyholder ownership. Our commitment to serving policyholders and helping more people address their financial needs remains unchanged. We appreciate your partnership and remain committed to delivering exceptional service, support and insurance solutions for you and your customers.”

I am not expert in corporate structuring but offer the following observations:

1.To the best of my knowledge (and the knowledge of a 17-year Mutual of Omaha employee I consulted today), all Mutual of Omaha LTCi policies have included the following wording: “This policy is non-participating. No dividends will be paid.”

2.The same is true for Mutual of Omaha’s Medicare Supplement policies.

3.The same was true of Mutual of Omaha‘s Disability Insurance (which they discontinued selling a year ago).

4.United of Omaha has been a stock insurance company subsidiary of Mutual of Omaha, so its products have been non-participating.

5.Therefore, this does not seem to be a meaningful change for our inforce policyholders or new business.

6.FYI, National Guardian Life is a mutual company but its LTCi policies say “This is a non-participating Policy.”

7. Although Thrivent’s policies permit dividends, Thrivent does not currently anticipate paying dividends on LTCi.

8. State Life is structured differently with a likely similar result. It and OneAmerica are mutual insurance companies but the State Life AssetCare policies state “PARTICIPATING. It is anticipated that no dividends will be declared.”

9. Mutual of Omaha’s new structure is NOT like what John Hancock and MetLife about 25 years ago; they demutualized.

If you don’t have a relationship with BackNine and would like to start doing business with us, click here